In the race to reap the productivity and growth rewards of the industrial internet of things (IIoT), Nordic countries are already among the leading nations.
In a study by IT services firm Accenture, the Nordics are placed among the countries with the most conducive environment for IIoT. They are joined by the US, Switzerland and Netherlands. On the other end of the spectrum are Brazil, Italy and Russia, while countries such as China, Japan, and Germany are mid-table performers.
The index used 55 indicators to measure a country’s economic, social and political enabling conditions for IIoT.
“The Nordics have particular strengths in the most fundamental basic requirements needed for the adoption of new technologies, and the creation of business models based on them,” said Paul Daugherty, chief technology officer at Accenture.
“These ‘business commons’ include the quality of, and access to, education, broadband infrastructure and financial capital. It is relatively easy to set up a business in the Nordics thanks to good governance and legal systems,” he said.
Furthermore, Norway, Sweden and Finland excel in their in ability to scale technology and encourage the spread of new technology offerings, while Denmark takes the top spot in “transfer factors”. This refers to the readiness of the business community to create business models and organisational structures that exploit digital technologies.
“Nordic countries are more open than some other European countries to innovative business models which disrupt traditional markets,” Daugherty said.
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Heikki Ailisto, research professor at VTT Technical Research Centre of Finland, also gave credit to the advanced mechanical engineering industry in the Nordics, which has a lot of experience in remote monitoring, and strong government support for IIoT.
But good foundations are just the start. Ailisto added that while there are progressive Nordic companies leveraging IIoT related technologies, such as machine-to-machine communication, investments in the field are only starting to grow.
Hybrid business models are coming
Despite the Nordic region faring well, it’s important to note none of the 20 countries in the study achieved the maximum 100 point score.
The results vary from 64 points for the US to Russia’s 21. Finland places third with 63.2 points, Sweden fourth (62.4), Norway fifth (61.8) and Denmark seventh (58.8). Consequently, all countries still have plenty of work to do if they want to fully benefit from IIoT.
That potential should not be taken lightly. Accenture estimates IIoT could add a total of $10.6tn to the global economy by 2030 under the current conditions. It believes an extra $3.6tn could be added to this total if IIoT investments were increased, and enabling conditions in the surveyed countries were further improved.
Companies are expected to benefit by using IIoT to improve efficiency through more automated processes, while smart machines and robotics increase productivity. But this is just the beginning.
“Most importantly, we see opportunities for new business models, particularly as industrial companies generate revenues from the data generated by products in the field. These product/service hybrids will create entirely new revenue streams,” said Daugherty.
Ailisto also believes data-based business models offer major potential for Nordic companies.
“We will see new players on the market who do not own machinery or factories, but know how to leverage data. They collect and sell this data to other companies in the value chain and might even reap the biggest profits,” Ailisto explained.
“During the next five years or so, companies will move to IIoT [and its new business models]. Frontrunners will gain the competitive advantage and others will have to follow – or disappear,” he concluded.
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